Marine Products(US:MPX)2024-04-25 18:41Part I. Financial Information Item 1. Financial Statements (Unaudited) Unaudited Q1 2024 statements show a significant decline in sales and net income year-over-year Consolidated Balance Sheets Total assets grew to $204.0 million, driven by an increase in cash and cash equivalents Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $81,225 | $71,952 | | Inventories | $55,210 | $61,611 | | Total current assets | $147,956 | $139,246 | | Total assets | $204,038 | $193,802 | | Liabilities & Equity | | | | Accounts payable | $13,064 | $6,071 | | Total current liabilities | $31,506 | $22,567 | | Total liabilities | $52,656 | $42,214 | | Total stockholders' equity | $151,382 | $151,588 | Consolidated Statements of Operations Q1 2024 net sales fell 41.7% to $69.3 million, leading to a 60.2% drop in net income Q1 2024 vs Q1 2023 Performance (in thousands, except per share data) | Metric | Q1 2024 | Q1 2023 | Change (%) | | :--- | :--- | :--- | :--- | | Net sales | $69,340 | $118,914 | -41.7% | | Gross profit | $13,984 | $29,022 | -51.8% | | Operating income | $5,242 | $14,489 | -63.8% | | Net income | $4,597 | $11,549 | -60.2% | | Diluted EPS | $0.13 | $0.34 | -61.8% | Consolidated Statements of Cash Flows Net cash from operations decreased to $15.9 million in Q1 2024 from $26.9 million in Q1 2023 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $15,915 | $26,946 | | Net cash used for investing activities | ($883) | ($1,789) | | Net cash used for financing activities | ($5,759) | ($5,727) | | Net increase in cash | $9,273 | $19,430 | | Cash at end of period | $81,225 | $62,601 | Notes to Consolidated Financial Statements Notes detail a significant drop in boat sales, a higher effective tax rate, and a $28.4 million repurchase obligation Disaggregation of Net Sales (in thousands) | Source | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Boats and accessories | $68,463 | $117,719 | | Parts | $877 | $1,195 | | Total Net Sales | $69,340 | $118,914 | Warranty Accrual Analysis (in thousands) | Description | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Balance at January 1 | $7,078 | $5,699 | | Payments made | ($965) | ($1,063) | | Warranty provision | $1,073 | $1,739 | | Balance at March 31 | $7,214 | $6,487 | - The company has contractual repurchase agreements with floor plan financing institutions with an aggregate maximum repurchase obligation of $28.4 million as of March 31, 202467 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 41.7% sales decline to lower unit volume and compressed gross margins Key Operating Statistics (Q1 2024 vs Q1 2023) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Total number of boats sold | 770 | 1,278 | | Average gross selling price per boat (in thousands) | $80.4 | $82.4 | | Gross profit margin percent | 20.2% | 24.4% | | Operating income (in thousands) | $5,242 | $14,489 | - Net sales for Q1 2024 decreased by 41.7% compared to Q1 2023, primarily due to a 39.7% decrease in unit sales volumes7684 - Selling, general and administrative (SG&A) expenses decreased by 39.8% to $8.7 million, mainly due to lower variable costs and a prior-year pension settlement charge87 - The company expects capital expenditures in 2024 to be approximately $5.0 million96 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company reports minimal market risk exposure, with no outstanding debt or derivative instruments - As of March 31, 2024, there were no outstanding interest-bearing advances on the company's credit facility, which bears interest at a floating rate118 - The company holds no derivative financial instruments and does not expect any material changes in its market risk exposures119 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024 - Based on an evaluation as of March 31, 2024, the CEO and CFO concluded that the company's disclosure controls and procedures were effective121 - No material changes in internal control over financial reporting occurred during Q1 2024122 Part II. Other Information Item 1. Legal Proceedings Current litigation is not expected to have a material effect on the company's financial position - Marine Products does not believe that the outcome of ordinary course litigation will have a material effect on its financial condition or results125 Item 1A. Risk Factors No material changes to risk factors have been identified since the 2023 annual report - No material changes to risk factors have occurred since the 2023 Form 10-K filing126 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company repurchased 85,444 shares in Q1 2024 related to taxes on vested restricted shares - In Q1 2024, 85,444 shares were repurchased at an average price of $10.62, related to taxes on vested restricted shares127128 - No shares were repurchased in the open market under the company's stock buyback program during Q1 2024, with 1,570,428 shares remaining for repurchase127 Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including required certifications - Exhibits filed include CEO and CFO certifications (31.1, 31.2, 32.1) and Inline XBRL files (101 series)133